Beyond Capitalism: Leland Stanford’s Forgotten Vision

Leland Stanford was one of the “Big Four” — the owners of the Central Pacific Railroad, and by mid-century he had amassed a fortune of many millions of dollars. When one spoke of a “Robber Baron” in the 1880s, Leland Stanford would be among the first names to come to mind. Yet during the final decade of his life, Leland Stanford had come to the conclusion that American society would in the future be better off if it did not create more tycoons such as himself; that the industries of American should instead come to be owned and managed cooperatively by their very workers, and the division between capitalist and laborer disappear. This, as Stanford saw it, would be a fulfillment of the dream of American democracy.

This idea did not originate with Leland Stanford. In the 1880s, the vision of a cooperative commonwealth—a system of worker-owned cooperatives—moved from the margins of politics to form the core of a mass political movement in the United States, the Populists, which was at its zenith. And Leland Stanford, citing his personal experience and applying his most forceful arguments, became a champion of the vision.

The Populists (involving millions of southern farmers and northern industrial workers) were the last mass movement in the United States to comprehensively challenge the growing domination of society by burgeoning corporations. From today’s vantage point, we may identify the labor movement as the home for such political aspirations. This, however, is a misconception; the “labor movement” emerged after the defeat of the Populists in the 1890s, and was far more narrowly conceived than the Populists’ambitions: it accepted a social contract that gave corporations the role of initiator and controller of employment, production, services, and capital. The labor union movement, in contrast to the Populists, sought merely to give workers better contracts within this structure of control. In American history since the defeat of the Populists, the idea of worker ownership of corporations has been relegated to the margins of political debate and creativity, a niche so marginal that from our vantage point of the 1990s, the idea sounds socialistic, utopian, or simply quaint.

In 1885, however, when Leland Stanford became a United States Senator and founded Stanford University, worker ownership of industry seemed neither utopian nor quaint. It was a widely discussed idea for averting the escalating crises between corporations and workers that appeared at that time to be headed toward an ominous denouement. Worker ownership of industry was seen as a good idea which needed to be tried, and America was seen as a society free enough that it could be tried. The Populists hoped therefore that the steady replacement of corporations by worker cooperatives could be achieved. The goal of the “seizure of State power” advocated by the communists in Europe was alien to this movement. Cooperatives were seen not as an end to free-enterprise, but as a freeing of enterprise for common people from domination by the “plutocracy” of wealthy industrialists.
 

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